Mortgage Rates to Head Lower Due to Government Actions?
With the government injecting billions of dollars into mortgage back securities there is only one true direction that mortgage rates can go and that is down.
Over the last two months, the Federal Reserve Bank and Ben Bernanke
has done everything in their power to push mortgage rates lower. The
United States government is planning on purchasing over $1 trillion in
mortgage backed securites and long term treasuries. No one really
knows if this is going to stimulate the economy and get the United
States out of this horrible recession but one thing it is guarenteed to
do is lower mortgage rates.
Mortgage rates have been under
5% for a few weeks now and it looks like they will not even retrace
back to that number. Last week many analysts predicted we would see
mortgage rates get closer to 5% as we need to retrace back to that
psychological level. That did not happen as mortgage rates dropped all
the way to 4.82%. It is likely that we are going to continue to see a
drop in average mortgage rates as the 5% barrier has been broken and
the government is pushing rates lower.
To try and forecast
where rates will be in a year would be very difficult as that would be
dependant on the overall economy. If we see the economy stablize and
start to get better, it is likely that the government will jump ship
and stop buying all the mortgage backed securities. If the economy
stays as it is now or worsens, mortgage rates could fall all the way to
4% or below. Ultimately, it is the overall economy that will be the
best mortgage rate forecaster. Until we see some type of recovery,
interest rates will continue to fall to historic lows.
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